We propose a concept of self-enforcing risk-sharing agreement that are robust not only to single-person deviations but also to potential deviations by subgroups, requiring that the deviating subgroup itself employs some self-enforcing risk-sharing agreement. We observe that the stability of subgroups may destabilize insurance arrangements among larger groups. Using this concept of stability, we study different examples.
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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number
gueconwpa~04-04-03.
Length: Date of creation: Date of revision: Handle: RePEc:geo:guwopa:gueconwpa~04-04-03
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Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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